Published: Thu, July 19, 2018
Money | By Armando Alvarado

Higher fuel prices help push June Consumer Price Index to 4

Higher fuel prices help push June Consumer Price Index to 4

THE Institute of Directors declared yesterday that a rise in United Kingdom interest rates next month was "not set in stone", after annual United Kingdom inflation defied economists' predictions of an increase by staying stuck at 2.4 per cent in June.

Despite motor fuel prices rising to their highest since 2014, annual consumer price inflation held in June at 2.4 per cent, the Office for National Statistics said.

Economists had been expecting the recent rise in oil prices to push up petrol prices and boost the rate of inflation.

Although the cost of gas and electricity prices increased and the price at the pump hit the highest level for almost four years, consumers benefited from the falling cost of computer games and the summer clothing sales.

Clothing prices tumbled by 2.3% between May and June.

Fed Chairman Jerome Powell gave an upbeat assessment of the outlook for the USA economy on Tuesday and downplayed the impact of uncertainty over US trade policy on the outlook for additional rate hikes. Economists had expected growth of 0.4%.

Households were also squeezed by gas and electricity costs, which rose 2.5% and 2.2% respectively, month on month. "The large downside surprise adds more uncertainty around what had until now appeared a near-certain August rate hike", JPMorgan economist Allan Monks said.

The last time CPI was higher was in February, when inflation was 2.7 per cent.

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There have been some signs of recovery which could encourage the BoE to raise interest rates in August, to counter the high levels of Inflation that have been seen since the Brexit vote.

On the other hand, prices for vegetables grew 8.12 percent in June as compared with a growth of 2.51 percent in May.

There was also a drop in the prices of games, toys and hobbies, particularly in the cost of computer games.

On a monthly basis, consumer prices remained flat in June versus the expected increase of 0.2 percent.

The U.S. dollar index, which measures the greenback's strength against a basket of six major currencies, was up 0.34% to 95.04, within close reach of the eleven-month high of 95.25 reached in late June.

It was suggested they could be increased from 0.5 per cent to 0.75 per cent in August.

Food prices eased by 0.6%, due primarily to a drop in fruit prices and a category that includes syrup, sugar, jam, chocolate and confectionery, for which prices fell 1.1% and 1.3% respectively.

Separate figures showed producer input prices rose 10.2 percent in June from a year earlier, driven by oil.

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